TheBusinessOfSport

'China's splurge will not slow down'

LeSports vice-chairman Ma Guoli (right) speaking at the All That Matters conference at Marina Bay Sands last month. He believes the potential for the sports market in China to grow is huge given that the country has a population of 1.37 billion.PHOTO: BRANDED ASIA

This month marks the two-year anniversary since China unveiled its masterplan to redevelop its sports industry. In the past 24 months, the country had spent billions as the balance of power in international sport has tilted towards the East.

Some of Europe's biggest football clubs have been snapped up, leading sports companies acquired and inroads made into the lucrative American market.

Among the most eye-catching deals were the Wanda Group's acquisition of Infront Sports & Media and World Triathlon Corporation for almost US$2 billion (S$2.77 billion) and the €740 million (S$1.13 billion) takeover of iconic Italian club AC Milan by a Chinese consortium. Wanda also owns 20 per cent of Spanish club Atletico Madrid.

These might be outrageous sums but do not expect the lavish outlays to slow down, David Hornby of Shanghai-based digital marketing agency Mailman Group told The Straits Times last month.

The sports business director, who was a guest speaker at the Sports Matters conference at Marina Bay Sands, added: "This is not a bubble. Yes, it's grown so fast so the assumption is that it has to burst at some point. However, this has been very well thought out and is a strategy rolled out for the next 10 years.

CONSUMERS STREAMING IN

You are coming to me for content you love to watch, and maybe one day you will become my consumer for other e-commerce items.

MA GUOLI, vice-chairman of LeSports, China's leading Internet-based sports company, on the prospects of providing over-the-top content and delivery.

"And, this is backed by a very powerful player, the Chinese government."

The scale of China's outbound investment has been wide and varied. Internet and mobile platform firm Garena, whose founder Forrest Li was born in China, signed a $4 million deal with the Football Association of Singapore's developmental team Young Lions in February.

But the domestic Chinese market has also flourished.

In the first half of 2016, 11 billion yuan (S$2.26 billion) worth of deals within the local sports sector were completed, more than three times of last year's transactions.

The Wanda Group announced in August plans to build a 63 billion yuan tourism and sports complex in Jinan by 2021.

There are still untapped areas. While the professional sports market in the United States is worth US$63.6 billion, consultancy firm PwC estimated that total revenues from ticketing, merchandise and advertising in China would only reach US$3.4 billion this year.

The potential for growth in a country of 1.37 billion people is huge, noted Ma Guoli, vice-chairman of LeSports, China's leading Internet-based sports company.

In February, it obtained the online multi-media rights of the Chinese Super League (CSL) in a deal worth 2.7 billion yuan. The CSL boasts star footballers like Brazil's Hulk, Paulinho and Ramires, Argentina's Ezequiel Lavezzi and Italy's Graziano Pelle.

Ma is an advocate of over-the-top content and delivery. He said: "Compared to television stations, we have room to develop. The Internet is interactive and mobile devices are very popular, especially among the younger generation. You are coming to me for content you love to watch, and maybe one day you will become my consumer for other e-commerce items."

According to a Nielsen report released this year, there are 1.305 billion mobile phones in China and 680 million active Internet users.

The report noted that "while television is still a primary source of information for much of China's population, particularly in non-urban areas, mobile is now close to PC (personal computer) in terms of devices used to access online sports content."

While some critics argue that translates into a a nation of couch potatoes, Bin Li, investment director at Kaixing Capital, which is a partner in a 10 billion yuan sports fund, disagrees.

He said: "The Chinese now have this image in their minds that the government is very supportive of sports. That's all you hear so naturally that creates interest and participation among the kids. Hopefully that builds a generation of athletes with a passion from inside them, instead of the current system where most are hand-picked and trained by the state."

Since topping the medal tally at the 2008 Beijing Olympics with 51 golds, China has regressed. It finished second in London four years later with 38 golds and dropped to third in Rio this year with 26 golds.

Arresting this slide is part of China's grand vision. Besides building a five trillion yuan sports industry by 2025 - which would represent an increase from the current 0.7 per cent to 1 per cent of its GDP - it also aims to make sports facilities more accessible, encouraging a healthier lifestyle among its citizens.

The target is for 700 million people to exercise at least once a week, 435 million to exercise thrice weekly by 2020 and to increase the average sports venue area per person from 1.5 sq m to 2 sq m.

China has also become home to some of the world's biggest sporting events. It will host the 2019 Fiba Basketball World Cup, the 2022 Winter Olympics while rumours of a bid for the 2030 Fifa World Cup continue to swirl.

Its national team might be 78th in the football world rankings right now and enduring a disastrous 2018 World Cup qualifying campaign but nothing is impossible in a country with a 5,000-year history, said Bin.

"If the Chinese government says it's going to do something, they'll get it done. The infrastructure is there, the capital is there. That's how China works. The commitment to sports is very real."

•The Business of Sport is a monthly series that explores the current trends and talking points of the emerging sport industry

A version of this article appeared in the print edition of The Straits Times on October 14, 2016, with the headline ''China's splurge will not slow down''. Print Edition | Subscribe

The Straits Times

We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused. Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs.